Different ways of doing business

Business schools always like to stress that they are up to speed with the latest developments in the world of business. The creation of course models on the ‘greening’ of business and an increased focus on corporate social responsibility (CSR) in the wake of the Enron scandal in 2001 are just two examples.

But what will be the impact on courses of the financial crisis, an event that shook the global economy to its foundations and which has been largely attributed to failures in executive decision-making and corporate governance? The evidence so far suggests that although changes are under way, and are being driven both by students and faculty, a revolution in MBAs is not on the cards.

Professor Lars Strannegård, who is in charge of the MBA programme at the Stockholm School of Economics, says that students’ interests have altered because of the crisis, and that his course has adapted to this. A group that began studying for their MBAs two years ago asked for extra teaching in macro-economics, he recounts, because of the prominent role that central banks have played in saving the global financial system.

He also says that interest in CSR and business ethics has been bolstered by the downturn.

“The financial crisis has really focused [attention] on issues of ethics,” he says. “Greed is behind some of the financial situation,” he says, adding that the crisis has led students to question the role of business, and the role of business in society.

“The MBA programme is really an excellent context in which to discuss these issues,” he says.

Ethical choices

Chris Jeffery, course director for the executive MBA at Cass Business School, part of City University London, has noted an increase in the number of students taking ethics as an optional course. He says that the school has launched an initiative to fully integrate ethics and CSR into its courses.

Evidence from the Frankfurt School of Finance and Management suggests, however, that this increased ethical sensitivity is not universal. Professor Hartmut Kliemt, who teaches ethics as part of the university’s masters in international business (MIB) and masters of finance courses, says he has not noticed a change in outlook among his students. He notes that when students on the MIB course gave their final presentations this summer they were “remarkably silent on the subject of the financial crisis”.

Another part of MBA courses that has been affected by the financial crisis is the study of risk.

“Risk models are still the same, but I guess the teachers are trying to stress that there are inevitably uncertainties,” Strannegård says. “Now we are starting to discuss how you actually assess risk. For example, are you sure of the underlying risk?”

Jeffery says that MBA accrediting bodies will “closely look at the teaching of risk” to ensure it is covered in courses. “In the crisis there was a failure of risk analysis, a failure to understand the complete picture,” he says.

Both Strannegård and Jeffery admit that MBAs have in the past given students a better grounding in some areas than others, and that the crisis has served to highlight deficiencies.

According to Strannegård: “MBAs have been very good at training analysts…they have been good at teaching people how to calculate.”

But he concedes: “They have not been so good at teaching people to ask questions, like ‘is this a good way of driving my business’.”

Jeffery says that “many business schools” have historically not been as good at teaching their pupils practical business skills, such as communication skills, as they have been at teaching them how to work with figures. “It is always easier to teach people figures than skills or ethics,” he says.

Importantly, however, neither of the two teachers believes that the MBAs they teach require a fundamental rethink because of the crisis. They say that their courses are in a constant state of evolution, and that this will continue.

“It is very dangerous for a school to think it cannot improve,” Jeffery says. He says that, while the MBA course “is going to change and evolve”, this change can be incremental if “you have developed the course on firm foundations”. “A good MBA prepares you for changing environments,” he says.

Strannegård stresses that his course has a “dynamic curriculum”, and that changes are introduced “all the time”.

According to these academics, the future of the MBA is evolution, not revolution.